Home Energy system Increasing Access to Energy: The Rise of Pay Solar and Innovative Payment Methods

Increasing Access to Energy: The Rise of Pay Solar and Innovative Payment Methods

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As commodity prices soar and world leaders worry about energy shortages and gasoline prices at the pump, millions of people in Africa still do not have access to reliable electricity. Half of the mainlanders cannot turn on a fan when temperatures rise, keep food cool or just turn on the lights. Decentralized off-grid renewable energy solutions are a viable alternative for millions of people, especially in countries with underserved populations and difficult terrain. Off-grid solar companies are using innovative technology systems ranging from pay-as-you-go (PAYG) technology to unconventional and revolutionary mobile applications to provide consumers with access to clean energy. One of the benefits of these financing and payment models has been the increased affordability of off-grid systems.

For example, according to the World Bank, West Africa has one of the lowest electricity access rates in the world; about 42% of the total population and 8% of rural residents have access to electricity. There is a disparity between access to the network and access to electricity. This means that there has been some involvement of decentralized renewable energy systems to bridge this gap. The idea of ​​a renewable decentralized system is now commonly and more consciously embraced in Africa.

The pay-as-you-go method for energy access

Decentralized renewable energy systems include mini-grids, micro-grids, solar home systems and many more. Growing adoption has enabled product manufacturers to develop affordable and sustainable clean energy products that meet the needs of rural consumers. Sun King offers a range of products integrated with pay-as-you-go (PAYG) technology that allows customers to make daily micro-payments for their home solar power system over a period of time, making them affordable. Huge initial sum is not needed for continuous energy, you can pay it flexibly over time.

The confluence of mobile use and access to energy

There have been multiple points of contact between the two industries, telecommunications and pay-solar, which prove that their relationship is immensely symbiotic in nature.

First, pay-as-you-go systems allow customers to recharge their mobile phones, keep them connected and maintain constant communication with the world, with their families, resulting in increased use of mobile services, data and airtime. It also allows users to do business remotely, sometimes even across borders.

Second, prepaid solar power (PAYG) has been made possible by mobile money and mobile connectivity that allows customers to pay in installments, and businesses to remotely control and monitor solar home systems (SHS). The PAYG solar industry has helped drive the adoption and use of mobile money, providing customers with a regular and essential use case, ensuring they have a power source convenient and safe to charge their phones, promoting financial inclusion. In much of the world, people do not live near banks or have bank accounts. Research suggests that the rapid spread of these systems that provide access to mobile money is driving significant economic growth in affected areas. In parts of Africa, mobile money systems are ubiquitous. In Uganda, 43% of people have a mobile money account. 84% of internet users in Kenya and 60% in Nigeria regularly made payments with mobile phones in 2021. The frequency of mobile money transactions is increasing for transactions of goods and services beyond energy.

Sun King works with telecom operators through various partnership models. The type of transactions: collection, collection, merchant payment, person-to-person payment, purchase of airtime, everything has increased for the PAYG group. The increase in person-to-person transactions reinforces that the adoption of PAYG is driving the use of mobile money in all types of transactions, and more value is flowing through the digital ecosystem.

Third, telecoms are increasingly looking beyond their revenue generation models and finding innovative partnerships that can lead to sustainable increases in ARPU and customer retention. For example, increasing mobile internet usage is a priority for mobile operators looking to boost phone business among their customers. Energy providers can and want to leverage their customer relationship to continue offering services after a customer has made payment for their first solar home system.

Expanding into rural consumer segments with value-added services such as pay-as-you-go solar products for daily power and infotainment is a really exciting place where telecoms can deliver long-term value to their users. PAYG smartphones, coupled with increased mobile usage, are a good example of this trend and are growing rapidly in related markets.

Creating an ecosystem through collaboration for energy access

The key to unlocking energy access requires a collaborative effort from industry and sector players working to serve the underserved population. For example, financing is very important for the PAYG solar deployment. The industry needs financiers to get more involved and partner with manufacturers and distributors to deliver power to rural communities. They (manufacturers and distributors) need access to financing to lend to customers, allowing them to pay for their energy in installments in a flexible and affordable way. With the pay-as-you-go option, manufacturers and/or distributors deliver energy to the consumer with the ability to pay for overtime. So who bears the huge capital cost or finances the working capital needed to finance and distribute solar home systems, mini-grids or macro-grids?

Reiterated at Mobile World Congress in Kigali, Rwanda this year, the PAYG opportunity is huge given the scale of pent-up demand for affordable routes to access essential goods and services. Partnerships between the PAYG provider and the mobile operator are key to meeting this need, as each party brings unique value. Although PAYG models are based on mobile services, PAYG providers and mobile operators can develop a symbiotic relationship to reach underserved communities with the services they need. Deepening these partnerships will ultimately reach end users with products and services they have traditionally been excluded from accessing.